The decision, from the Seventh Circuit Court of Appeals in Chicago said "discrimination on the basis of sexual orientation is a form of sex discrimination."

Federal law forbids workplace discrimination on the basis of race, color, religion, sex, or national origin, but it does not explicitly mention sexual orientation, and the U.S. Supreme Court has never ruled on the issue.

But the appeals court, in an 8-3 decision, said "it would require considerable calisthenics to remove the 'sex' from 'sexual orientation.'"

The ruling is an immediate victory for Kimberly Hively, a part-time professor who claimed she was denied a full-time post because she is a lesbian. She said Ivy Tech Community College in South Bend, Indiana, never even interviewed her for a full-time position.

"Federal law is catching up to public opinion: 90 percent of Americans already believe that LGBT employees should be valued for how well they do their jobs, not who they love or who they are," said Nevins. "Now, through this case and others, that principle is backed up by the courts."

In the past, every federal appeals court to consider whether gay employees are entitled to non-discrimination protection has ruled that they are not, though the Equal Employment Opportunity Commission recently said they are protected.

But in Tuesday's ruling, written by Chief Judge Diane Wood, the appeals court said its conclusion was based on previous Supreme Court decisions involving employment discrimination and gay rights, "as well as the common-sense reality that it is actually impossible to discriminate on the basis of sexual orientation without discriminating on the basis of sex."

Writing for the court's dissenters, Judge Diane Sykes called the ruling "momentous" but said it was the equivalent of "a statutory amendment courtesy of unelected judges," resulting in "the circumvention of the legislative process by which the people govern themselves."

The majority opinion also said it was not deciding whether the case might have come out differently had Ivy Tech been a religious institution.

"We hold only that a person who alleges that she experienced employment discrimination on the basis of her sexual orientation has put forth a case of sex discrimination" for purposes of federal civil rights law.

Last month, by a 2-1 vote, a federal appeals panel in Atlanta reached the opposite conclusion in the case of Jameka Evans, who claimed she was targeted for termination because she didn't "carry herself in a traditional woman manner" in her job as a hospital security officer.

Congress has repeatedly rejected a federal non-discrimination law for gays and lesbians, but 22 states have laws prohibiting workplace discrimination based on sexual orientation.